The present invention relates generally to a system and method for administering a rebate program. More particularly, the present invention is directed to a system and method for administering a reward-based marketing program by determining rebate information based on purchases made using a card payment instrument, and for applying the rebate information to fund at least part of a brokerage transaction.
Some businesses offer rebates to loyal customers based on their respective net purchases over a span of time. For instance, some airlines offer customers “free” mileage based on respective total mileage amounts that customers have accrued over a span of time (thus providing a type of “frequency-based” reward program). Other businesses have adopted similar models. For instance, some stores (such as supermarkets) monitor the purchases of customers and then provide various rewards to the customers based on the volume and/or composition of the customers' purchases. Store-based reward programs typically identify the customers at the checkout stand and then post the customers' purchases to respective customer accounts.
Financial card systems may also offer rebates. For instance, the known DISCOVER® card provides a relatively small annual cash rebate to cardholders based on the aggregate value of the cardholders' purchases in the course of the year. The card provider distributes the rebate via a check or like means of payment (such as discount coupons). Upon receipt, the cardholders are free to spend the rebates in any manner that they deem appropriate.
The above type of card-based rebate program may appear attractive to some cardholders. However, this credit card rebate program may not be effective in establishing a lasting association in the minds of the cardholders between the rebates and the card provider. Further, the distribution of rebates directly to the cardholders (without any conditions placed on the use of the rebates) may be an ineffective technique in “steering” the cardholders' behavior toward desired ends. Thus, for instance, the above-described rebate program cannot be used to entice cardholders to utilize the services of third party providers (such as other financial institutions associated with the card provider). In this sense, the above-described program may be regarded as “one-dimensional.”
The patent literature describes more complex rebate programs. For instance, U.S. Pat. No. 6,105,865 discloses the transfer of card-based rebates to a participant's trust fund account. U.S. Pat. No. 6,070,153 discloses the transfer of card-based rebates to various types of retirement accounts, college saving accounts, 401(K) profit sharing plans, etc. U.S. Pat. No. 5,787,404 discloses transferring card-based rebates to a long term investment account with a financial institution (such as a bank, savings and loan association, credit union, broker-dealer, insurance company, etc.). U.S. Pat. No. 5,970,480 discloses converting card-based rebates into ownership interests in investment instruments, such as mutual funds, bonds, insurance investments, or an annuities.
The above-described programs may have a number of drawbacks. For instance, the programs may fail to encourage cardholders to actively interact with the third party investment provider. For example, a cardholder may lose interest in the investment program because the rebates are typically small, and therefore may be perceived as having only a negligible impact on the investment as a whole. A cardholder may also become disinterested in the program because the investments are perceived to offer no immediate benefits (e.g., the pay out of a long-term investment may be perceived as too “remote”). Further, a cardholder may lose interest in the program because the interface for interacting with the investment provider is perceived as cumbersome or otherwise ineffective. Such lack of interest in the program may reduce revenue generated by the program for both the card provider and the investment provider. This lack of interest may also prevent cardholders from taking appropriate action to make their investments more effective (e.g., by eliminating unproductive assets).
Known rebate programs may also suffer from additional unspecified shortcomings.
There is accordingly a need to provide a more effective card-based rebate program.